IMF: Slovak GDP To Fall Nearly 5% In 2009

RTTNews - Tuesday, the International Monetary Fund or IMF said Slovakia's economy is projected to shrink by about 5% this year, and to return to growth by expanding close to 2% in 2010.

In its regular staff report after Article IV consultation with the Slovak Republic that ended on May 25, the IMF said growth is expected to resume in 2010 as Slovakia's major export markets will start bouncing back and short-term interest rates remain supportive.

The IMF's GDP outlook for the current year is better than a 6.2% contraction predicted by the country's Finance Ministry.

Reflecting the broad economic downturn, the IMF forecasts the unemployment rate to increase to more than 12% by end-2009, and remain high through 2010.

The general government deficit is forecast to widen to about 5% of GDP in 2009, up from 2.25% in 2008. Under EU rules, current and potential Eurozone members must keep their budget deficits below 3% of GDP.

With regard to Slovakia's banking sector, the IMF said pressures on banks are expected to intensify in the second half of the year as an increasing number of borrowers will face financial difficulties.